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“closely held company”

Losses & Set-offSection 79Section 79300 judgments

The decision most relied on for closely held company is CIT v. Ankitech (P) Ltd. (340 ITR 14), cited in 202 judgments on BharatTax.

Leading authorities on closely held company

CIT v. Ankitech (P) Ltd.
340 ITR 14 · 2012 · High Court
202
citing judgments

Deemed dividend under section 2(22)(e) cannot be taxed in the hands of a non-shareholder. The Supreme Court confirmed this view, affirming the Delhi High Court's decision in Ankitech.

CIT v. Universal Medicare Pvt. Ltd.
324 ITR 263 · 2010 · High Court
111
citing judgments

Deemed dividend under section 2(22)(e) is assessable only in the hands of the beneficial shareholder who receives the benefit of the loan or advance, and not in the hands of the company receiving the loan.

CIT v. Mukundray K. Shah
290 ITR 433 · 2007 · Supreme Court
99
citing judgments

For Section 2(22)(e) to apply, a payment by a company must be in the nature of a loan or advance, and the company must have accumulated profits. Such payments to a concern in which a shareholder, holding more than 10% voting power, has a substantial interest are deemed dividends if the shareholder ultimately benefits, even if routed through different modes or concerns.

Miss P. Sarada v. CIT
229 ITR 444 · 1998 · Supreme Court
64
citing judgments

A loan or advance from a closely held company to a shareholder is a deemed dividend under Section 2(22)(e) upon receipt, unaffected by subsequent repayment or adjustment.

(Refer: CIT v. C.P.Sarathy Mudaliar
83 ITR 170 · 1972 · Supreme Court
63
citing judgments

For the purpose of deemed dividend under section 2(22)(e) of the Income-tax Act, the term 'shareholder' refers exclusively to a registered shareholder of the company, and not a beneficial owner or non-shareholder.

CIT v. Madhur Housing and Development Company
401 ITR 152 · 2018 · Supreme Court
49
citing judgments

A loan or advance from a closely held company to a 'concern' where a common shareholder has a substantial interest is not a deemed dividend under Section 2(22)(e) for the 'concern' if it is not a shareholder of the lending company. Deemed dividend under Section 2(22)(e) is taxable only in the hands of the registered or beneficial shareholder.

CIT v. Mukundray K. Shah, Citation No.
160 Taxmann 276 · 2007 · Supreme Court
39
citing judgments

Section 2(22)(e) of the Income Tax Act, 1961, aims to prevent tax evasion by treating certain payments made by closely held companies to shareholders or their concerns as dividends.

PCIT v. BST Infratech Ltd.
161 Taxmann.com 668 · 2024 · High Court
32
citing judgments

When shares are issued at a premium, the genuineness of the transaction is paramount, not necessarily the source of the investor's funds. The court emphasizes verifying the transaction's authenticity, even if investor identity is established.

Judgments citing closely held company

ACIT, Central Circle-II, Gurgaon vs. Anoop Thatai, New Delhi

In the result, appeal of the revenue is dismissed

ITA 6362/DEL/2018[2015-16]Status: DisposedITAT Delhi13 Jan 2022AY 2015-16

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

DCIT, Central Circle-II, Gurgaon vs. Sudhir Dhingra, New Delhi

In the result, appeal of the revenue is dismissed

ITA 6361/DEL/2018[2016-17]Status: DisposedITAT Delhi13 Jan 2022AY 2016-17

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

DCIT, Central Circle-II, Gurgaon vs. Sudhir Dhingra, New Delhi

In the result, appeal of the revenue is dismissed

ITA 6360/DEL/2018[2015-16]Status: DisposedITAT Delhi13 Jan 2022AY 2015-16

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

DCIT, Central Circle-II, Gurgaon vs. Sudhir Dhingra, New Delhi

In the result, appeal of the revenue is dismissed

ITA 6359/DEL/2018[2013-14]Status: DisposedITAT Delhi13 Jan 2022AY 2013-14

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

DCIT, Central Circle-II, Gurgaon vs. Sudhir Dhingra, New Delhi

In the result, appeal of the revenue is dismissed

ITA 6358/DEL/2018[2012-13]Status: DisposedITAT Delhi13 Jan 2022AY 2012-13

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

DCIT, Central Circle-II, Gurgaon vs. Sudhir Dhingra, New Delhi

In the result, appeal of the revenue is dismissed

ITA 6357/DEL/2018[2011-12]Status: DisposedITAT Delhi13 Jan 2022AY 2011-12

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

DCIT, Central Circle-II, Gurgaon vs. Sudhir Dhingra, New Delhi

In the result, appeal of the revenue is dismissed

ITA 6356/DEL/2018[2010-11]Status: DisposedITAT Delhi13 Jan 2022AY 2010-11

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

Sudhir Dhingra, New Delhi vs. DCIT, Central Circle-II, Gurgaon

In the result, appeal of the revenue is dismissed

ITA 5722/DEL/2018[2016-17]Status: DisposedITAT Delhi13 Jan 2022AY 2016-17

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

Sudhir Dhingra, New Delhi vs. DCIT, Central Circle-II, Gurgaon

In the result, appeal of the revenue is dismissed

ITA 5721/DEL/2018[2014-15]Status: DisposedITAT Delhi13 Jan 2022AY 2014-15

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

Anoop Thatai, New Delhi vs. DCIT, Central Circle-II, Gurgaon

In the result, appeal of the revenue is dismissed

ITA 5719/DEL/2018[2014-15]Status: DisposedITAT Delhi13 Jan 2022AY 2014-15

Bench: Sh. Amit Shukla, Judicialmember & Sh.B. R. R. Kumar

Section 132Section 139Section 147Section 153ASection 158BSection 2(22)(e)

where is the question of applying and invoking section 2(22)(e), which requires that the loan should be advanced by a closely held company. It goes without saying that M/s SKAE is not a company and impugned loan has not been received by the appellant from M/s OCL. Therefore ... partnership firm. Therefore, as per the admitted case of the A.O., such loan or advance having notbeen received by the assessee from a closely held company i.e. from Orient Craft Ltd. or 39 Olympus Realters P Ltd. cannot be treated as dividend u/s 2(22)(e), since the first ingredient

Trojan Developers Pvt. Ltd., New Delhi vs. PCIT, New Delhi

In the result, the appeal of the assessee is allowed

ITA 4919/DEL/2019[2014-15]Status: DisposedITAT Delhi10 Nov 2021AY 2014-15

Bench: Sh. Amit Shukladr. B. R. R. Kumarita No. 4919/Del/2019 : Asstt. Year : 2014-15 M/S. Trojan Developers Pvt. Ltd. Vs Pcit, 41-A, Prithvi Raj Road Delhi-9 New Delhi-1 New Delhi (Appellant) (Respondent) Pan No. Aaact0146K Assessee By : Sh. Rakesh Joshi, Adv. Revenue By : Sh.H.K.Choudhary, Cit Dr Date Of Hearing: 18.10.2021 Date Of Pronouncement: 10 .11.2021

For Appellant: Sh. Rakesh Joshi, AdvFor Respondent: Sh.H.K.Choudhary, CIT DR
Section 143(1)Section 143(2)Section 143(3)Section 56Section 56(2)

failed to enquire about the issuance of shares at very high premium to 2 M/s. Trojan Developers Pvt. Ltd. its closely held company within the meaning 56(2)(viib) of the IT Act. 4. During the year under consideration the assessee allotted 28729 shares to its closely held two companies

Tci Exim P.Ltd, New Delhi vs. ACIT, Circle-25(1), New Delhi

In the result, both the appeals of the assessee are allowed

ITA 4195/DEL/2018[2014-15]Status: DisposedITAT Delhi02 Nov 2021AY 2014-15

Bench: Sh. Amit Shukladr. B. R. R. Kumarita No. 4194/Del/2018 : Asstt. Year : 2013-14 Ita No. 4195/Del/2018 : Asstt. Year : 2014-15 Tci Exim Pvt. Ltd., Vs Acit, C/O Ravi Gupta, Adv., Circle-25(2), E-6A, Kailash Colony, New Delhi New Delhi (Appellant) (Respondent) Pan No. Aaact8397A Assessee By : Sh. Ruchesh Sinha, Adv. Revenue By : Sh. Ratan Singh, Sr. Dr Date Of Hearing: 21.10.2021 Date Of Pronouncement: 02.11.2021

For Appellant: Sh. Ruchesh Sinha, AdvFor Respondent: Sh. Ratan Singh, Sr. DR
Section 2(22)Section 2(22)(e)

Rs.52,00,000/- during the F.Y. 2012-13 to fulfill the enhanced requirement of working capital for export orders. • TCI India Ltd. is closely held company holding 50,000 equity shares of the assessee company which is 2.5% of the total equity shares issued and subscribed. • The AO made addition

Tci Exim Pvt. Ltd., New Delhi vs. ACIT, Circle- 25(2), New Delhi

In the result, both the appeals of the assessee are allowed

ITA 4194/DEL/2018[2013-14]Status: DisposedITAT Delhi02 Nov 2021AY 2013-14

Bench: Sh. Amit Shukladr. B. R. R. Kumarita No. 4194/Del/2018 : Asstt. Year : 2013-14 Ita No. 4195/Del/2018 : Asstt. Year : 2014-15 Tci Exim Pvt. Ltd., Vs Acit, C/O Ravi Gupta, Adv., Circle-25(2), E-6A, Kailash Colony, New Delhi New Delhi (Appellant) (Respondent) Pan No. Aaact8397A Assessee By : Sh. Ruchesh Sinha, Adv. Revenue By : Sh. Ratan Singh, Sr. Dr Date Of Hearing: 21.10.2021 Date Of Pronouncement: 02.11.2021

For Appellant: Sh. Ruchesh Sinha, AdvFor Respondent: Sh. Ratan Singh, Sr. DR
Section 2(22)Section 2(22)(e)

Rs.52,00,000/- during the F.Y. 2012-13 to fulfill the enhanced requirement of working capital for export orders. • TCI India Ltd. is closely held company holding 50,000 equity shares of the assessee company which is 2.5% of the total equity shares issued and subscribed. • The AO made addition

Shri Anil Nanda, New Delhi vs. DCIT, New Delhi

In the result, the appeal filed by the assessee is dismissed

ITA 3318/DEL/2017[2007-08]Status: DisposedITAT Delhi18 Aug 2021AY 2007-08

Bench: Shri R.K. Panda & Shri Kuldip Singhassessment Year: 2007-08 Anil Nanda, Vs Dcit, 12-C, Friends Colony, Circle-68(1), New Delhi. New Delhi. Pan Aafpn4381A (Appellant) (Respondent) Assessee By : Shri Deepak Ostwal, Ca Revenue By : Shri Satpal Gulati, Cit, Dr Date Of Hearing : 02.06.2021 Date Of Pronouncement : 18.08.2021 Order Per R.K. Panda, Am: This Appeal Filed By The Assessee Is Directed Against The Order Dated 31St March, 2017 Of The Cit(A)-32, New Delhi Relating To Assessment Year 2007-08. 2. Facts Of The Case, In Brief, Are That The Assessee Is An Individual & It Filed Its Return Of Income On 30Th July, 2007 Declaring Total Income At Rs.8,25,64,675/-. The Assessment Was Completed U/S 143(3) Of The Act On 30Th October, 2009 Accepting The Returned Income. Subsequently, The Ao Reopened The Assessment U/S 147 Of The It Act, 1961 After Recording The Following Reasons:-

For Appellant: Shri Deepak Ostwal, CAFor Respondent: Shri Satpal Gulati, CIT, DR
Section 143(3)Section 147Section 148Section 151Section 2(22)(e)Section 246

reiterate that as per this provision, the following conditions are to be satisfied: (1) The payer company must be a closely held company. (2) It applies to any sum paid by way of loan or advance during the year to the following persons: (a) A shareholder holding at least ... advance is not in course of ordinary business activities. 24. The intention behind enacting provisions of Section 2(22)(e) is that closely held companies (i.e. companies in which public are not substantially interested), which are controlled by a group of members, even though the company has accumulated profits would

Luxottica India Eyewear Pvt. Ltd., Gurgaon vs. ACIT, Circle- 15(2), New Delhi

The appeal of the assessee is allowed

ITA 126/DEL/2018[2013-14]Status: DisposedITAT Delhi26 Apr 2021AY 2013-14

Bench: Sh. Amit Shukladr. B. R. R. Kumarita No. 126/Del/2018: Asstt. Year: 2013-14 M/S Luxottica India Eyewear Pvt. Ltd. Vs Acit, 7Th Floor, Dlf Building No. 9, Tower- Circle-15(2), B, Phase-Iii, Dlf Cyber City, New Delhi Gurgaon (Appellantt (Respondent) Pan No. Aabcl3871C

For Appellant: Sh. Nageshwar Rao, AdvFor Respondent: Sh. Surendrapal, CIT DR
Section 143(3)Section 92BSection 92F

established primarily for the purpose of carrying on the business of trading of sunglasses and spectacles frames in India. Luxottica India being a closely held company, 99.99 per cent of its equity shares are held by Luxottica Holland. 4. The primary issue relates to determination of Most Appropriate Method

ACIT, New Delhi vs. M/S Opus Projects Ltd., Delhi

Appeal is dismissed

ITA 5470/DEL/2016[2012-13]Status: DisposedITAT Delhi19 Jan 2021AY 2012-13

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: Shri C. S. Anand, AdvFor Respondent: Shri H. K. Chaudhary, CIT DR
Section 30Section 40Section 40A

Alliance promoters private limited is appearing as a related party of Opus reality development Ltd, thus he held that it is a closely held company by assessee. He noted that about 80% of total expenses incurred by assessee are either on account of consultancy expenses of legal expenses has been

DCIT, New Delhi vs. M/S. Opus Projects Ltd., New Delhi

Appeal is dismissed

ITA 3939/DEL/2015[2011-12]Status: DisposedITAT Delhi19 Jan 2021AY 2011-12

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: Shri C. S. Anand, AdvFor Respondent: Shri H. K. Chaudhary, CIT DR
Section 30Section 40Section 40A

Alliance promoters private limited is appearing as a related party of Opus reality development Ltd, thus he held that it is a closely held company by assessee. He noted that about 80% of total expenses incurred by assessee are either on account of consultancy expenses of legal expenses has been

DCIT, New Delhi vs. M/S. Opus Projects Ltd., New Delhi

Appeal is dismissed

ITA 3938/DEL/2015[2010-11]Status: DisposedITAT Delhi19 Jan 2021AY 2010-11

Bench: Shri Bhavnesh Saini & Shri Prashant Maharishi(Through Video Conferencing)

For Appellant: Shri C. S. Anand, AdvFor Respondent: Shri H. K. Chaudhary, CIT DR
Section 30Section 40Section 40A

Alliance promoters private limited is appearing as a related party of Opus reality development Ltd, thus he held that it is a closely held company by assessee. He noted that about 80% of total expenses incurred by assessee are either on account of consultancy expenses of legal expenses has been

CIT vs. Odeon Builders Pvt Ltd

ITA - 248 / 2012HC Delhi29 Nov 2013
Section 143(3)Section 148(3)Section 68

that the Assessee was a private limited company and there was close and proximate relationship between the promoters/directors and shareholders and that the closely held companies accept subscriptions of share capital or deposits only from the friends or relatives of the promoters/directors and such companies were not allowed to accept ... that the Assessee was a private limited company and there was close and proximate relationship between the promoters/directors and shareholders and that the closely held companies accept subscriptions of share capital or deposits only from the friends or relatives of the promoters/directors and such companies were not allowed to accept

CIT vs. Odeon Builders Pvt Ltd

ITA - 247 / 2012HC Delhi29 Nov 2013
Section 143(3)Section 148(3)Section 68

that the Assessee was a private limited company and there was close and proximate relationship between the promoters/directors and shareholders and that the closely held companies accept subscriptions of share capital or deposits only from the friends or relatives of the promoters/directors and such companies were not allowed to accept ... that the Assessee was a private limited company and there was close and proximate relationship between the promoters/directors and shareholders and that the closely held companies accept subscriptions of share capital or deposits only from the friends or relatives of the promoters/directors and such companies were not allowed to accept